Remitting from India to buy property in Dubai

USD 250,000 in a financial year. That is the ceiling on what a resident individual in India may send out under the Reserve Bank's Liberalised Remittance Scheme, and a Dubai purchase has to be built around it. The year runs April to March. The Scheme is open to individuals only, and the Master Direction is blunt about who is shut out.

Three separate things then have to line up, and they live in three different instruments. The Scheme has to permit the remittance. The foreign exchange rules have to permit the acquisition itself, which is a different question with a different answer. And the Income-tax Act takes its cut on the way out, then asks for a disclosure every year the flat is held.

What the limit has to cover

That is not a property allowance. The USD 250,000 subsumes the current account purposes available under Para 1 of Schedule III to the Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015: private visits, gifts and donations, emigration, maintenance of relatives abroad, business trips, medical treatment abroad and studies abroad. A year with university fees in it is a year with less room for a deposit. The number of transfers does not matter. Once the limit is used up no further remittance is possible that year, even if the proceeds of the investments have been brought back into the country.

The limit has moved down as well as up. It was cut to USD 75,000 on 14 August 2013 and took until 26 May 2015 to recover. Anyone budgeting a purchase across several financial years is relying on a figure the Reserve Bank has set seven different ways since 2004.

Whether a family can pool its limits

One individual's USD 250,000 rarely covers a whole Dubai unit, so this is the question that decides most purchases. Consolidation across family members is allowed, with conditions, and the FAQs treat property separately from everything else.

Two conditions are doing the work there. Each relative has to be a person resident in India who independently meets the terms of the Scheme, and consolidation is tied to co-ownership. Names have to match. Paragraph 4 of the Master Direction then adds a redirection rather than a rule, saying remittances for purchase of property shall be in accordance with paragraph 6(ii), which points at the overseas investment framework instead of settling the point.

Permission for the property itself

Buying abroad and paying abroad are governed separately, and much published guidance still cites the wrong instrument for the first of them. Acquisition used to sit in the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015, notified as FEMA 7(R)/2015-RB on 21 January 2016 and gazetted as G.S.R. No. 95(E). They were superseded on 22 August 2022 by the Overseas Investment Regulations, 2022 (FEMA 400/2022-RB).

The 2015 regulations are still published on the Reserve Bank's own website and still quoted freely. The operative provision is rule 21 of the Overseas Investment Rules, 2022, notified as G.S.R. 646(E). On the payment side, paragraph 6(ii) of the LRS Master Direction lists acquisition of immovable property abroad among the permissible capital account transactions, expressly subject to that framework.

Tax collected at source

Tax collected at source on an LRS remittance falls under section 394 of the Income-tax Act, 2025. Collection happens at the time of debiting the amount payable or at the time of receipt, whichever is earlier. A property purchase is neither education nor medical treatment, so it lands in the residual category and the highest rate. The trigger is an amount or aggregate of the amounts exceeding ten lakh rupees, so several smaller transfers in one year are read together.

The cut to 2 per cent for education and medical treatment comes from the Budget for 2026-27, with effect from 1 April 2026. The 20 per cent for everything else was left where it was, so the amendment changes nothing for a buyer.

Collected is not the same as gone. It enters the return as a tax already paid, sits alongside advance tax and tax deducted at source, and produces a refund where total taxes paid exceed the year's liability. What it costs is the use of the money in between.

What the bank checks before releasing the money

• One designated branch. Every remittance under the Scheme goes through a single branch of an authorised dealer nominated by the individual.
• Form A2, furnished for the purchase of the foreign exchange. Where the remitter is a minor, a natural guardian countersigns it.
• PAN. Paragraph 16 makes it mandatory for any remittance under the Scheme.
• A bank account held with that bank for at least one year before a capital account remittance. For a newer customer the bank takes the previous year's statement, or failing that the latest assessment order or return, to satisfy itself about the source of funds.
• Payment out of the individual's own funds, by cheque drawn on the applicant's account, debit to the account, demand draft or pay order, or by card.
• No borrowing behind it. Paragraph 12 says banks should not extend any kind of credit facilities to resident individuals to facilitate capital account remittances under the Scheme.

The last of those is the one people meet late. A facility taken in India to fund the transfer runs into paragraph 12, however the money is routed. The declaration in Form A2 belongs to the remitter, and the FAQs put ultimate responsibility for compliance on the remitter rather than on the bank that processed it.

Where the Scheme will not take the money

• Anything prohibited under Schedule I, or restricted under Schedule II, to the Foreign Exchange Management (Current Account Transactions) Rules, 2000.
• Margins or margin calls to overseas exchanges or counterparties.
• FCCBs issued by Indian companies, bought in the overseas secondary market.
• Trading in foreign exchange abroad.
• Capital account remittances, directly or indirectly, to countries the Financial Action Task Force identifies as non-co-operative countries and territories.
• A gift in foreign currency from one resident to another, for the credit of the second person's foreign currency account held abroad under LRS.

Check the FATF entry against the current list, not against memory. The list is revised at each plenary, and the Master Direction points at the FATF website rather than reproducing it. The Scheme's reach over a destination can change without any Indian instrument being amended.

Rent, sale proceeds and the 180-day rule

Income earned on an investment made under the Scheme may be retained and reinvested abroad. Money received, realised, unspent or unused is treated differently. Unless it is reinvested, paragraph 17 requires it to be repatriated and surrendered to an authorised person within 180 days of receipt, realisation, purchase or acquisition, or of the date of return to India, under Regulation 7 of the Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015. The clock runs from the receipt, not from the year end. A rental balance that simply accumulates abroad with nothing reinvested is what the provision is written for.

The disclosure that comes back every year

Holding a flat abroad creates an annual reporting obligation whether or not it earns anything. Schedule FA of the return, headed Details of Foreign Assets, has its own table for immovable property. For assessment year 2026-27 these are the fields the return will not accept as blank.

• Country name and country code, which cannot be India.
• Zip code and address of the property.
• Ownership, selected from direct owner, beneficial owner or beneficiary.
• Date of acquisition.
• Total investment, at cost, in rupees.
• Income derived from the property, the nature of that income, and the taxable amount.
• Which schedule of the return that income has been offered in: salary, house property, capital gains, other sources, exempt income, or no income during the year.

The Board's validation rules for ITR-2 make it mechanical. Schedule FA has to be filled if the foreign asset question at serial number 19 of Part B-TTI is answered yes, so a return that says yes and leaves the schedule empty fails validation rather than quietly filing. The outward leg needs nothing from the remitter, because remittances under the Scheme are reported by authorised dealers in FETERS in the normal course.